We use cookies to customise content for your subscription and for analytics.If you continue to browse Lexology, we will assume that you are happy to receive all our cookies. For further information please read our Cookie Policy.

Another FTC lawsuit brought against marketers

Over the past several months, the Federal Trade Commission (FTC) has been aggressively pursuingindividuals and entities that it believes violated the FTC Act and the Amended Telemarketing Sales Rule (ATSR). On Tuesday, the FTC filed a complaint in the U.S. District Court for the Northern District of Illinois against 9 defendants: Acquinity Interactive, LLC; 7657030 Canada Inc., d/b/a Acquinity Interactive; Garry Jonas, an officer of Acquinity Interactive; Revenue Path E-Consulting Pvt Ltd; Revenuepath Ltd; Worldwide Commerce Associates, LLC, d/b/a WCA; Sarita Somani, an officer of the Revenue Path defendants and Worldwide Commerce Associates; Firebrand Group S.L., LLC; and Matthew Beucler, an officer of Firebrand. The complaint alleges that the defendants violated the FTC Act and the ATSR.

Details of the ATSR Violations

In its complaint, the FTC alleges that the defendants made a vast number of unauthorized robocalls to consumers promising “free” gifts or prizes if the consumers provided sensitive personal information, applied for credit or subscribed to the defendants’ / third parties’ advertised services. For those that are unaware, a “robocall” is a telephone call or text message that utilizes a computerized auto-dialer and/or delivers a pre-recorded message. Robocalls tend to receive a heightened level of scrutiny under various state and federal telemarketing laws.

Consumers who pursued the defendants’ offers were taken through a series of websites that required them to provide personal information and/or sign up for various services prior to receiving the promised gifts. The FTC claims that in many cases, the information was requested under the guise of being shipping information for the supposed gift cards. Also, as alleged in the complaint, the consumers’ information was then sold to third party advertisers, subjecting the consumers to further unwanted automated telemarketing calls.

Penalties

In addition to seeking monetary penalties and the disgorgement of the defendants’ allegedly ill-gotten gains, the FTC requested that the Court grant a preliminary injunction against the defendants, including freezing their assets, to avert the likelihood of consumer injury during the pendency of the case. Furthermore, the FTC requested that the defendants pay the costs of bringing the suit in court, as well as all associated attorneys’ fees.

How to Protect Your Business

The FTC’s most recent complaint is part of a larger trend of regulatory action within the telemarketing space and is not limited to the FTC. The Federal Communications Commission (FCC) has similar telemarketing regulations codified in its Telephone Consumer Protection Act (TCPA), which we have previously discussed in this blog. In light of this action, and the general regulatory trend (on a state and federal level), telemarketers should review their marketing practices (and those of their respective affiliates) to ensure compliance with FTC, FCC and state telemarketing regulations. As this case illustrates, individuals and businesses that fail to comply with state and federal deceptive marketing and telemarketing statutes may find themselves facing regulatory action from the FTC and/or state regulatory bodies, as well as consumer class action litigation.